Summary of Section Two 


Background - Managed care plans that become successfully licensed in states enter a highly competitive marketplace. Plan selection by purchasers and those individual consumers with the luxury of choosing plans, dictates market success or failure.

In an ideal world, plan selection would be based on a consumer's determination of plan value, as measured by price, covered benefits, quality and customer satisfaction. Managed care plans that produce better value for their customers would reap the rewards through increased enrollment and revenue. All consumers would benefit from plans competing to generate ever-improving quality and service at lower prices.

Most observers agree that the textbook model of value-based plan competition does not exist in today's market. Many consumers either do not have health insurance, their employer selects a plan for them (particularly small employers), or their choice of plan is limited. Moreover, consumers with choices typically select a health plan based on cost, benefits, and the provider network within a plan. Information on quality-based plan performance and customer satisfaction is not available, leaving the current marketplace dominated by price competition. This has negative consequences for quality health care as plans squeeze important investments in internal quality assurance and improvement programs, reduce staffing levels, and shift financial risk to network providers to stay price competitive.

Recently, however, there has been a renaissance in the field of quality measurement that shows promise for producing consumer reports (often called "report cards") on quality-based plan performance. The Agency for Health Care Policy and Research (AHCPR), NCQA, the Foundation for Accountability (FACCT), Medicare Peer Review Organizations (PROs), academic groups, research corporations, and specialty societies are just some of the groups involved in practice guideline development, performance and outcome measurement, consumer surveys and other significant quality measurement activities.

AHCPR is currently sponsoring a five year Consumer Assessments of Health Plans Study (CAHPS). CAHPS is a major effort to:

  1. develop and test questionnaires to assess health plans and services from the point of view of consumers;
  2. produce easily understandable reports for communicating survey information to consumers
  3. evaluate the usefulness of these reports for consumers selecting health care plans and services.
HCFA announced this summer its commitment to develop comparative reports on plan performance to help guide beneficiary selection of Medicare HMOs. Information from HEDIS 3.0, Medicare PRO activities, and a CAHPS based beneficiary survey will be included in the reports to beneficiaries. Likewise, Medicaid state agencies are committed to comparative reports as increasing numbers of Medicaid clients move into managed care plans.

NCQA recently released Quality Compass - its first report card on the comparative performance of 226 health plans providing services to 26 million individuals. Quality Compass combines the results of NCQA accreditation and HEDIS information (HEDIS is NCQA's performance measurement system for health care plans). Major employers have indicated that they will integrate Quality Compass information into plan descriptions and comparisons provided to employees.

State government is becoming more active in the informed choice arena through the establishment of managed care information advisory committees, boards, and councils responsible for the collection and public release of information on provider performance. Pennsylvania established a Health Care Cost Containment Council that for many years has been producing comparative performance reports on hospitals, physicians and soon managed care plans. Minnesota, Florida and Utah are all engaged in comparative reports card development for managed care plans licensed in the state.

Conclusion - The dissemination of comparative information on plan performance begins to introduce informed consumer choice to the marketplace and quality-based competition. It also sends a strong signal to managed care plans that quality will become a distinguishing factor in plan selection and future market success thus encouraging plan investments in quality improvement. But despite recent advances in quality measurement and information disclosure, it will be many years before informed consumer choice drives a quality-based competitive marketplace for managed care plans. Quality measurement science is still in relative infancy. Consumers will needed expanded choice of plans and education and training to understand and use sophisticated comparative information. Common sense regulation, consumer protections, and independent quality oversight are needed to supplement informed choice strategies and assure the quality of health care.

Model Legislation Highlights

In section two, The Quality Imperative creates a managed care information system that supports an informed consumer choice strategy and an external quality monitoring and improvement program (see chapter four - Independent Quality Monitoring and Improvement Program). The state is directed to establish an managed care information database and is given the authority to develop managed care information reporting requirements for managed care plans licensed by the state. The state is also required to develop an annual consumer guide to assist consumers in health plan selection.

An advisory Managed Care Information Council is established to recommend the specific standardized performance measures that will comprise the annual consumer guide. The model legislation requires that comparative performance measures be developed for: premium prices and copayment requirements; benefits and covered services; quality measures covering process, outcomes, functional status, preventive/acute/ambulatory/nursing/long-term care services, and care provided to vulnerable populations. The state is also directed to: develop service quality measures covering enrollment and disenrollment rates, complaint and appeals statistics, and waiting and appointment time statistics; and consumer satisfaction ratings generated by an annual survey of plan enrollees.

State requirements for plan data reporting are based on the information needed to generate the annual consumer guide for plan selection. Health plans are mandated to generate and report a patient encounter database to support internal quality improvement activity, the annual consumer guide and the ongoing quality monitoring activities of the Quality Improvement Foundation (QIF) particularly in the area of assuring appropriate enrollee access to needed care. The model legislation also requires that data self-reported by health plans be externally audited.

Consumer Coalition for Quality Health Care


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